Inflation in Indonesia

It was reported that inflation in Indonesia has reached 21 months high. Last year, the inflation was 6.96, quite high compared to 2.78 in 2009, but still lower than 11.06 in 2008.

Picture 1 Inflation in Indonesia

Inflation means prices for goods and services in general is increasing, in other words, most things become more valuable, except MONEY. Thus, if inflation rate is still increasing or as high, it's better to acquire assets than keep cash in hand and sell the assets when inflation rate has been stabilized to around 2-3% per year.

Now the inflation has been increased to 7.01 (accumulated from 2010). Purchasing power definitely keeps decreasing, thus general consumption is also decreasing. Weak consumption condition and the possibility of increasing borrowing cost due to increasing BI rate make me think that now may not be the right time to establish a new business venture.

Source: Biro Pusat Statistik, Bloomberg